Board & CEO Advisors, Management Consultants

Monthly Archives: September 2014

80% of businesses in Middle East are family-run or family based. According to Middle Eastern Business Insights, over 41% of the business plan to pass the mantle to next generation. More than $1 trillion is expected to be handed down to next generation. However, less than 40% of business have shareholder agreements in place and about 40% have no plan to deal with conflict that may arise between Faraid’s, Asaba and Arham claimants under Shari’s succession laws. What is distressing is that if business history of other families is any indication, just about 1/7th of business will survive intergenerational transfer and other family business may just perish.

Even though Middle Eastern companies are different in size and governance areas, one central element common is the overlapping role of family, ownership and management. The family firms have brought few competent outsiders to lead and manage their business and resolve the issue around succession. In many cases, in-laws and relatives are appointed as leaders or key executives. Hence, succession for many of these companies is not about family persons but also other positions.

How must the Middle Eastern businesses plan and execute succession. Few common elements of successful succession plans across the world can be pointers.

Nurturing and mentoring are essential to sustain and extend founder’s entrepreneurial values

Heirs well-prepared in terms of educational background and experience and having spent couple of years at different levels are better prepared

Family must plan current owner characteristics and leadership style, current company situation, leadership development and successor characteristics and post-succession company structure and process

Discuss the succession management within family and with Board

Plan the role adjustment process for the founder and the next generation family member

Exposure to various aspects of business at early age is important

Training (formal or on the job) has certain advantages

While mentoring from father is a must, complement with outside professionals

Succession should be encouraged to build their own performance assessment system

Gaining experience outside the system is a must for diversified groups

Attempt transition when the business is health and markets are near normal

How do companies with low investment attain High Impact!. Companies are realizing there smarter ways to get noticed and generate revenue than blow tons of dollars on advertisement. Companies across the world are recognizing the value of going frugal, yet innovative.

Being frugal! in business means gaining higher goals with relatively lower investments and efforts. Frugal also refers to optimal use of means to reach goals. Frugal is not just an effective strategy for new entrants to market, but also the incumbent. Frugal strategies for newbies is more to make noise and getting notices, while the focus of frugal for incumbents would be to increase richness and affinity of engagement.

Fremium is not just a customer acquisition strategy, but also a proven strategy for brand building. It is a strategy that not only works with IT products, but also with other physical goods. A good story here is Grand sweets, an Indian Sweets and Savories chain in Chennai India, which was the first to employ widows, but also shares a small portion of “Puliyogare” free for all walk-in in customer. Founder’s logic was children and elderly would walk-in for the freebie and the parents and other accompanying them would end up buying some items. This is also a strategy used by many Indian restaurants in USA and Canada where they offer free meals to deserving students instead of throwing out the left-overs. Lo, they have won a battery of converts who canvass for them whenever a white or native asks them for a reference.

The newbies can follow the experience sharing strategy. This can include sharing free info, case studies, videos, blogs or any content online. This is an effective strategy not just for IT intensive businesses but also physical products such as engineering goods, medical devices, etc. Experience sharing can also be with respect to sharing an article about your brand\offering for free online or offline. The content in the article will be read and eventually might get you a free publication in the newspapers. Entrepreneurs these days become members of StartUp movements and fests which directly gives them exposure to media, even before launching their brands in the market.

Another approach well practiced by restaurants in USA and other parts of world, is what is known as Chinese Cab strategy. Chinese restaurants in these markets offer good food at reasonable price when they open and attract Cabbies, Guides and journalists because they are open later hours. Once they have established a reputation, these restaurants slowly start upscale themselves and price themselves out of reach of their old patrons. This sour grape strategy works well even in times of Zomato as many key informational sources fondly remember and vouch for the restaurant.

Some companies imitate a natural phenomenon, host-parasite approach, to grow their brand. Companies use industrial associations, church groups, Haj Committees or Pooja Pandals to get noticed and build a brand community. Choosing the host is an important element of this strategy. Most effective ones are when the products/services are unrelated or at best complementary.

While freebies by themselves may not work, exploiting sociological aspects like communities of interest or communities of work can quickly build +ve WOM and brand. NIRMA, which created quite a buzz and competed with Unilever worked on a community approach to build attention and brand. They identified a specific user group in India, the washer-men community in the dhobighats of Gujarat and gave packets of NIRMA for free. This worked out well for Nirma as the WOM went viral among the Washer-men communities. With its competitive pricing NIRMA acquired a major chunk of 35% the market share in a shorter span of time.

Some brands pursue a any attention is good to build branding approach. This strategy works best in the creative industries, where controversies lead to promotion. Playing on greed is a good old strategy used by traders and con artists. Some companies, especially in consumer goods have exploited this strategy. Classic case is an Indian Biryani group which advertised 1 GM gold coin in any of its packs and ensured the wins get advertised at their local stores attracted enough eyeballs and foot falls.

Outcomes and their quality of government projects is a hotly contested area. Many of the government projects suffer from overrun, inconsistent standards of measurement of evaluation, planning paralysis, greater reliance on ad hoc experts committee with little ownership and weak stake holder consultation. Development agencies including lending banks have embarked upon “program for results” approach with an objective of greater ownership and management by borrowing governments. The objective is quite laudable but comes with lots of assumptions and ignores ground level happening.

In a recent meeting of government officials involved in a project was an eye opener. The government agency had received a development loan and pursued infrastructure, policy and procedural changes. Rural roads have been tarred or cemented, self-income generating buildings such as shops have been constructed, primary schools equipped with better toilets and cultural infrastructure built across the nooks of the state. What was appalling was the governance and project management was weak in initial years. Transfer of a technocrat to head the division to manage the outcomes after two years of initiation of program set the ball rolling. Post completion of the project period the bureaucracy and the expert team guiding the program were caught in a peculiar problem. The lending organization was ready to roll out the next phase of the financing and the state machinery had no clue how to present the achievements in completion reports. Program for results is a results-based financing instrument, tied to prior agreed development indictors. These indicators are identified by the borrowing agency and approved by the lender and often the indicators get changed after approval. Another challenge is the borrowing agencies present a high level roll out plan and do not detail the low level indicators clearly.

A deeper discussion with the concerned officers revealed where the challenge was. Monitoring and evaluation is the key to successful implementation of any government projects. These projects, often spanning multi-years requires management of multiple organs of government machinery simultaneously. Program owners, are often senior bureaucrats who also carry additional burden of managing the day-to-day tasks and a program within its life-cycle can witness transfers or retirement of senior administrators. M&E is often relegated to a data management role, often managing post-hoc information. Project approvals, sequencing of tasks and projects and quality of outcomes is not a proactive function. While per functionary log frames or resultant frameworks are created, annual work plans (RAWB) are not detailed, resulting in diffused ownership and outcomes. The lending agency’s officers need to clearly define the outputs, outcomes and impacts of the program. The government officials need to align their tasks and goals with the results.

Organization culture is an amalgamation of knowledge, beliefs, rituals, customs, values, hierarchy and social behaviour. A common grouse most CEO’s voice is their HR is unable to build and sustain the “intended culture”. Their intention of creating a thriving organization where every action has purpose, employees own the roles and responsibility and collectively the organization excel in their activities may not be happening seamlessly. The reason could be the HR is too caught up in mundane transactional activities or naïve and inexperienced to understand what exactly to do. Many inexperienced HR seldom understand why the company celebrates diverse festivals or post host of photos on Facebook and other social media. The challenge is more pronounced in professional organizations wherein junior employees need to learn the rigours of the profession and ropes of vocation by observing, practicing and imbibing the values. Limitations of collegiate education with rudimentary exposure to practice and real-life professional requirement add to the woes.

Another major challenge is when organizations undergo restructuring and a newer CTO or business leader may pursue short-term actions that impair the organizations existing culture. In a large IT organization well known for process driven and quality adherence, a newly minted CTO brought in drastic changes that expedited software development but at a huge cost to the quality and reliability of the development. Favouritism, lack of documentation, and poor process ownership resulted in otherwise well-knit unit fragmented and ineffective. So how does one go about building an organizational culture where outcome quality matters, customer delivery, professional ownership and development is the norm.

Culture needs to be defined, practiced, communicated and reinforced. First define the elements of culture you want to create. In a professional service firm environment the elements could be how would seniors review and guide the juniors?. How open and periodic would be the feedback.? How would incompetence and low quality work be tolerated?. How would job rotation be used to identify the hidden and right talents of the employee?. How would you handle wrong hire?. Would there be an automatic Performance improvement plan (PIP) pursued even when the employee is known to be ineffective?. Define what would be the right initiative taking behaviour? Would you want inexperienced employee to take decisions and react to customers without knowing the implications?. Loads of apologies and sorry may not bring back the customer lost or brand compromise.

One the cultural elements are broadly defined, roll out and practice with highest intensity. Do not take short cuts. If the objective is to create “quality outcome” driven culture’ do not promote “Chalta Hai” attitude. Curb it right away. Provide the feedback instantly rather than waiting for a formal review period.

While action speaks louder than words, communicating the results of actions is a must. Communicate positive results and behaviour. If an employee happens to be late always while reporting to work but prompt at checking out, communicate it rightly. If an employee’s quality of work is poor and does not meet client requirement, provide the feedback directly so that employee knows about it. If an employee is unable to justify the role he/she has been hired, communicate the alignment issues, and address the issue by allocating the employee based on their interest and competence.

Finally, a culture can only be sustained by continuous reinforcement in terms of its application and follow up. Handle transgressions with care, educate employees why adherence to rituals, participation in festivals and posting in Facebook is important. If an employee is disgruntled for want of adherence educate him. Remember the pain of discipline hurts far less than pain of regret.

What do ALS ice bucket challenge, P&D Tampax, Unilever “Dove campaign for real beauty” Volkswagen: The Fun theory, Old Spice man aftershave or KLM surprise have in common. They are all good examples of how to plan and execute a successful viral marketing. Many believe viral marketing needs to have a whacky idea to attract interest/create suspense, and conversations amongst users and brand. Successful viral marketing campaigns go beyond these. Some common elements of good viral campaigns include: 1) surprise/interest element, 2) scalable idea unlimited by culture and religious restrictions, 3) persuasion by influencers, 4) exploit common motivations, and 5) market the marketing.

Surprise element is undoubtedly very important in viral marketing campaigns. The exhilarating moment packs the required spice of experience for individuals to stay connected with the campaigns. But the potential for disaster also lies within it. Toyota’s “the other you” game for advertising Matrix is a classic example. The rules of the game went like this; a person would sign up for his unwitting friend and then that friend would get stalked by strangers. The game not only scared the hell out of people, but also annoyed them. People felt that their privacy was infringed. Toyota focused too much on the surprise element while ignoring a very important factor – the emotions surprise is going to evoke. If the surprise doesn’t bring any pleasant emotions then the whole campaign goes for a toss.

ALS ice bucket or Volkswagen’s Fun theory campaigns like many other successful ones are scalable ideas that take an everyday activity and make it fun to positively affect people behavior. Volkswagen involved its targets/customer to series of experiments to find how these could make people healthier, environmentally conscious and safer, all the while creating a parallel experience with brand elements and the campaigns. Same goes for ALS which used a mundane daily activity of bathing into a ritual to raise awareness about ALS and seek donations through crowdsourcing. Co-creation where the company encourages users to become actively involved in the brand or product is a key component of viral marketing. This helps companies to stop selling to them, but instead market with them.

Persuasion by influencers, whether active or passive, is an important element of spread of viral marketing. Insights from social network theory reveal that “network central” influencers (one with many connections) are most effective to communicate the campaigns and if there is an element of persuasion, like invitation or challenge, people networked with influencers are baited to participate. ALS influencer invites are a case in point.

Social stigma’s of refusing a challenge or the need to be seen in the company of Page 3 is a “primal” drive which most successful campaigns cleverly exploit. The common motivations of Homo sapiens to be seen as the social animal, higher up in hierarchy helps people to donate and participate in events.

KLM using a similar surprise-and-delight strategy as Toyota identified irate passengers waiting for their flights ad presented them with thoughtful presents. The clincher in the campaign was actually the act being completely filmed live by a camera crew and that led to positive human emotional drama. This helped KLM use an effective marketing to connect and appeal to customers, but also market their marketing effectively.

Now onto some marketing campaigns that brought more bricks and bats than bouquets. The mistake of putting popularity above purpose is another factor. AT&T’s tweet had to face the consequences of doing it. AT&T uploaded a picture of a smart phone clicking 2 streaks of light at ground zero as a tribute to 9/11. The tweet had to be withdrawn immediately as it was considered offensive by a lot of people. Here the purpose was to pay the tribute but instead they tried to capitalize off of the emotions surrounding 9/11 for profit. A separate ad only for smart phone without linking it to 9/11 would have served the purpose. Well, they did get the popularity but only to tarnish their own image.

The marketers also seem to be overlooking the kind of conversations which are going to surround the campaign. Hyundai’s pathetic attempt to make suicide look funny created a lot of negative conversations. Some of the audiences could relate it to suicides of their closed ones and were tormented by the ad. It evoked bad memories and people went around talking about it which gave it a multiplier effect.

The 21st century audience is unforgiving as social media has emboldened them. Plan well to pursue viral marketing campaigns, ensure all elements are well packaged. With a small dosage of common sense and focus on objective, this aim is not unachievable.